Contracts shield Asia’s EV battery makers from nickel surge, for now



By Heekyong Yang and Norihiko Shirouzu

SEOUL/BEIJING, March 9 (Reuters)Asian battery makers for electrical motor vehicles are shielded from a massive, immediate hit from surging nickel prices amid Russia’s invasion of Ukraine, many thanks to long-time period contracts and a diversified source chain, companies and industry resources reported.

Nickel price ranges doubled on Tuesday to a lot more than $100,000 for every tonne, a surge resources blamed on brief covering by a single of the world’s prime producers, forcing the London Metal Trade (LME) to halt nickel trading.

Tsingshan Holding Team purchased huge amounts of nickel to decrease its quick bets on the steel, sources explained. Shares of organizations uncovered to the Chinese producer tumbled on Wednesday. .

“We have extensive-expression supply contracts with metal suppliers and producers, so we are not expecting any quick affect on our nickel supplies,” explained an official at South Korea’s SK Innovation 096770.KS, whose battery device SK On provides to Ford F.N and Kia 000270.KS.

A different formal at a South Korean big battery manufacturer, who declined to be discovered because the organization has not created a assertion on the make a difference, claimed the organization sources nickel from several international locations such as Australia and Indonesia so there was “extremely confined influence” on its nickel procurement for now.

Both equally officials said the firms have been closely monitoring the condition following LME’s abnormal go.

The current surge in nickel have not experienced a really serious affect on the EV source chain due to the fact Indonesia and other destinations have the most significant nickel mines and the dimension of Russia’s nickel mines is not specifically huge, explained Cui Dongshu, secretary-standard of the China Passenger Car Affiliation.

Russia accounts for 5% of world-wide nickel creation but provides a fifth of the world’s large-grade nickel, in accordance to an estimate from Benchmark Mineral Intelligence (BMI).

Costs of the steel were being climbing even prior to Russia invaded Ukraine as stock dwindled owing to battery makers these kinds of as SK Innovation and compatriots LG Power Remedy (LGES) 373220.KS and Samsung SDI 006400.KS, China’s CATL 300750.SZ and Japan’s Panasonic 6752.T rising generation to meet up with rising desire.

Nickel selling prices rose 25% past yr, and right before the invasion on Feb. 24 prices were being now up about 20% this 12 months.

Most battery makers have extensive-time period contracts.

For instance, previous calendar year, LGES purchased a 4.8% stake in China’s Greatpower Nickel & Cobalt Elements and signed a six-year agreement with the company to supply 20,000 tonnes of nickel starting in 2023.

Some marketplace resources say mounting fees in the extensive term could hurt automakers, which are previously grappling with an acute shortage of semiconductor chips and are probable to pass the value on to consumers.

“I feel it is dependent on how very long this extremely high price tag will previous,” stated a battery engineer in China who declined to be recognized because they are not authorised to discuss with media.

“If it sustains, then the nickel suppliers will have no preference but to inquire their customers to take a renegotiated selling price. They can generally cite the power majeure clause in their agreement. No 1 could forecast a war like this.”

Nickel Price ranges surge

(Reporting by Heekyong Yang in Seoul and Norihiko Shirouzu in Beijing More reporting by Jenny Su in Beijing, Zhang Yan in Shanghai, Eileen Soreng in Bengaluru Crafting by Sayantani Ghosh in Singapore Editing by Kim Coghill)

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